TTIP: Towards an EU-US free trade deal – But what’s in it for our partners?

The third round of negotiations between the EU and the US took place in Washington DC, in December 2013. The next round will start in mid-March 2014. Talks for a free trade deal may take longer than initially foreseen and major challenges need to be addressed to reach an agreement, but negotiations seem to be on the right track to conclude in what will become the most far reaching free trade deal ever concluded. TTIP would create the world’s largest free trade area and thereby become a virtual regulatory hegemony.

If not overshadowed by international crisis the next major step forward will be the EU-US Summit taking place in Brussels on 26 March. It will be the first time President Obama visits Brussels and the EU institutions. It will certainly be an important moment for both negotiating partners to underline their political commitment of concluding a far-reaching deal, despite strong criticism on certain issues.

In parallel to the ongoing discussion between the two biggest trading powers worldwide, some of their partners have raised legitimate concerns about the discrimination stemming from a bilateral free trade agreement for those who are out. According to a study of the Bertelsmann Foundation and the ifo institute, non-TTIP economies will be affected by trade redirection effects – meaning shrinking exports and negative effects on their respective labour markets. In the worst case scenario the study estimates the loss in real per capita income is the highest for Canada with – 9,5%, closely followed by Mexico with – 7,2%. For the countries that have free trade agreements or as in the case of Turkey a customs union with the EU, the scenario may be a bit better, though still worrying: Iceland and Norway – 3,9%, Switzerland – 3,5%, Turkey – 2,5%.

Needless to say that the NAFTA members Canada and Mexico on the one side and the EFTA members and Turkey on the other side of the Atlantic ocean have already asked to be included in the agreement or at least consulted on it. However, in view of the complexity of the present deal between the EU and the USA, including more countries could make the deal impossible. So the question remains: what’s in the deal for the EU and the US’ partners? “A lot!” was the immediate answer given by Dr Jan Atteslander, Director of Foreign Trade of economiesuisse, the main Swiss business federation composed of 30.00 entrepreneurs, who employ 1,5 Million people. Switzerland, as its EFTA partners Norway, Iceland and Lichtenstein, has a high degree of economic integration both with the EU and the US. Atteslander drew a differentiated picture of the effects of TTIP on third countries. He underlined the positive effects of the transatlantic deal on the world economy and the growth effect triggered by increasing demand for innovative products from partner economies. Furthermore, TTIP could improve the framework for international supply chains. According to Atteslander, trade facilitation, improved standards and better supervision are benefiting all partners, not only the members of TTIP. Even though he called upon the EU and the US “don’t forget us!”.

Against this positive evaluation of the effects of TTIP on third countries, Murat Kayalar, Member of the Executive Board of the Turkish business association TUSKON, presented a more critical view. Indeed, the negative effects of a closer transatlantic trade and investment partnership may be strongly felt in Turkey. Via the customs union with the EU, goods from the US could be exported to Turkey without tariffs, some of which in direct competition with Turkish goods. However, Murat Kayalar strongly opposed some Turkish voices, which call for a cancellation of the customs union and the renegotiation of a free trade agreement with the EU. Obviously, the easiest solution for Turkey would be to join the EU and thus automatically be a part of TTIP. But EU membership will not be achieved in the short term. Thus, a docking mechanism through which to include third parties might be a solution for countries like Turkey and Switzerland.

From the EU Commission’s point of view, the priority is to conclude an agreement. As Dr Frank Hoffmeister, Deputy Head of Cabinet of EU Trade Commissioner Karel de Gucht, pointed out, the Commission hopes to finalize the agreement before the end of the Obama administration. Peter Chase, Vice President for Europe of the U.S. Chamber of Commerce, underlined how important the Transatlantic Trade and Investment Partnership is from a geopolitical point of view. The agreement is not only relevant because of the reduction of tariffs, other trade barriers and regulatory cooperation, but also because it will contribute to creating a stronger relationship across the Atlantic.

The question remains how to overcome opposition and criticism on both side of the Atlantic. How do the negotiating parties address the concerns of civil society? How will supporters of the agreement convince Congress and the European Parliament to give their approval? In this respect, Hoffmeister pointed out the Commission’s efforts to have an open and transparent debate organizing consultations with all relevant stakeholders. However, in his view, “it will be the national governments of the member states that will have to support and defend the agreement.” Picking up on the importance to start informing and convincing people, governments and the media of the importance of the TTIP, Hans Stein, Director International Political Dialogue of the Friedrich Naumann Foundation for Freedom saw off the participants by “giving them the homework” to maintain the level of public discussion on the advantages and the impact of the transatlantic free trade agreement.